Paying for Care
Part 3 – Notional income and Third Party Top Ups
So in Part 1 & 2 we have looked at what is included and excluded as far as the Local Authority calculations for financial support go. So having worked out what is included, how do the Local Authority then calculate the contributions?
If you own a house worth £150,000, only you live there, there is no mortgage, you have £15,000 in the bank and you have a weekly income of £200 (which includes all you pensions and benefits). In this example, I will say that the care home fees for the home are £650 per week and the Local Authority rate is £550 per week: For the first 12 weeks, the property is disregarded, so only the £15,000 is assessed. For every £250 over £14,250, the person is deemed to have £1 per week of income (this would equate to an interest rate of 20.8%), but is meant to be a mechanism to slowly reduce capital to that lower rate of £14,250. The individual is allowed to keep £23.90 per week for personal expenditure. The Local Authority will only pay up to their local rate, they can sometimes be persuaded to pay a higher rate, but this is discretionary and they need good reason to do so. Therefore:
+ £3 (£15,000-£14,250=£750 – £750/£250=£3)
=£176.13 (the amount the person has to pay towards their care)
=£373.87 (how much the Local Authority will pay towards care)
=£100 (the amount of the Third Party top up)
So what is a third party top up and who are the first and second parties and who is responsible for this payment? The first and second parties and the individual and the Local Authority, a third party is therefore anyone who isn’t them. The Local will usually ask family members for this £100 per week, but it could be charity or any other body that isn’t the first two parties. This liability can be onerous, as families can often find £100 to help their parent, but £100 every week? That becomes a big burden and sums involves are usually more than just nominal.
If the family cannot pay, the Local Authority is likely suggest moving the individual to a home that accepts the Local Authority rate, but in order to move them, there needs to be a real place, not just a theoretical one and that place must be able to meet the needs of the individual, then potentially they can move them. If for any reason the family do not pay, it is the Local Authority that is liable for this payment to the care home. In the above scenario, the individual may be able to use their house as a third party top up, but those without a home and who are relying on their family for support, may find themselves moved into a different home and one neither they nor their families like.
After the first 12 weeks, the house is assessed; the person has over £23,250 of assets and becomes fully self funding. As they don’t necessarily have the cash, the Local Authority can put a charge on the house, so that when the house is sold, the charge has to be paid off.
All the above figures are 2013/2014 rates, but these usually change every new tax year.